Field of the Invention
Embodiments of the present invention relate to direct digital cash exchange systems and methods that protect anonymity and employ multiple layers of encryption. More specifically, the present invention relates to systems and methods of digital representations of currency that can be transferred with validity and anonymity closely approximating that of hard currency in an economy.
Description of the Related Art
Digital cash is a form of electronic money that is a digital equivalent of hard cash currency or asset value stored on an electronic device or remote server. There exists many forms of digital cash throughout the world and it is gaining in popularity for internet based transactions.
There are so-called centralized systems based on hard currency such as eCash, PayPal, WebMoney and the like. These systems “sell” electronic currency on the internet to users whom have provided personal identification and other information. They act as intermediaries and require verified payment methods such as credit cards and checking accounts all of which have their own personal information caches available for verification. Centralized systems gather and share the personal information of their users amongst the various parties that make up the systems. These systems further require audit accountability in much the way bank checking accounts do, while the normal use of hard cash does not. Still further, these centralized systems track all ends of a transaction and store this data on a central server subject to audit and compromise. There also exists decentralized electronic currency system based on cryptocurrency that secure transactions using cryptography and control the creation of new units of currency. Examples of cryptocurrency systems include Bitcoin and Litecoin. The decentralized electronic currency systems of the prior art also require identification of users and Bitcoin even publishes its blockchain or public ledger. Many of the cryptocurrency systems have values that are not based on legal currency. There are concerns about the apparent conflict with existing banking systems, liquidity, and the sometimes volatile fluctuation of the currency within the markets.
The prior art includes U.S. Pat. No. 8,738,539 purporting to provide privacy protection for the user. It is a virtual account based digital cash system employing two pairs of private and public keys. Although the system described does not use any blind signature schemes, it requires the users to give up privacy by providing personal information to establish the virtual accounts with the issuer of digital cash virtual accounts and wherein such personal information is stored with the issuer of digital cash virtual accounts.
There are several other problems associated with the electronic currency systems that currently exist. The overarching problem is that although they are commonly referred to as “digital cash” they do not operate in the anonymous fashion of hard cash. When a person walks into a brick-and-mortar store and purchases something using hard currency the sales person (or automated point of sales machine) receives no information about that person. Since hard cash is fungible the cash that is used is virtually untraceable. When a person uses the electronic currency systems of the prior art a great deal of their personal information is required. The mere divulgence of such information is a problem for many people.
Another problem with handing over personal information to third party electronic currency providers is identity theft. When a third party stores unencrypted personal information of users it allows any hacker to steal and use the information for nefarious means.
The loss of personal privacy alone is yet another problem of the electronic currency systems of the prior art. Even partially encrypted systems yield metadata vulnerable for hackers to seize and exploit. The data is mined automatically using software and can be used to investigate or target someone in particular. If, for example, someone pays their heart physician using an electronic currency system a third party can use that data to infer that the user is having heart problems.
Accordingly, there is a need for a secure electronic currency system that allows for the direct exchange of a digital form of cash by a user, based on hard currency, that allows for full anonymity of the user.